Q: A DIRECTOR TAKES A MINIMAL SALARY (SAY, £10,000) through THE COMPANY PAYROLL AND ALTHOUGH THE EMPLOYER WAS ISSUED WITH A FORM SL1 (NOTICE TO MAKE STUDENT LOAN DEDUCTIONS) HER SALARY IS BELOW THE RELEVANT THRESHOLD AND NO withdrawal HAS BEEN MADE. HOWEVER, SHE IS ALSO A SHAREHOLDER IN THE COMPANY AND RECEIVES DIVIDENDS OF £20,000. HOW ARE THESE TREATED FOR STUDENT LOAN reasons?
A. It is correct that if the employee has gross below the relevant threshold, no Student Loan deductions will be made through the payroll.
If the former student has any other sources of income, then any loan refund will be computed and paid via the Self-Assessment Tax Return. Dividends (or other “unearned income”) of £2000 or less per annum are ignored – however, if the total unearned income overreach £2000 then the whole amount is taken into account. The first £2000 is not exempted.